Archive for the 'For Buyers' Category
Think Carefully Before Investing in Local Foreclosures
December 12th, 2008 categories: Chicago Real Estate News, For Buyers, For Homeowners, Foreclosures, Housing Market, Mortgage Info
It’s tempting when you read about the growing number of housing foreclosures across the country and locally here in Chicago to consider entering the market for distressed properties. After all, there are plenty of housing bargains to be found, right?
But before you take the plunge, you should consider this: Purchasing a foreclosed property or a short sale is far riskier - and much more challenging - than is buying a typical residential home.
There is certainly an opportunity for investors to find foreclosed properties in the Chicago area. Geoff Smith, vice president of the Woodstock Institute, said recently that the number of foreclosures in the Chicago area will rise nearly 40 percent to more than 53,000 in 2008. But finding a foreclosed property and buying one are two different matters.
First, don’t try to buy a foreclosed property without the help of a licensed REALTOR® who has experience working the foreclosure market. Such a REALTOR® can help you find a good home for a good price. Such a REALTOR® can also help you avoid some of the more common pitfalls associated with buying a distressed property.
Second, remember that foreclosed homes are often in terrible shape. Owners who are about to lose their homes don’t always take the best care of their residences. Some, frustrated at their situation, may even take out their anger on their property, intentionally damaging their homes. If you want to invest in a foreclosure, don’t expect a home that’s in top condition.
Third, don’t be unrealistic. You can’t buy a HUD home for $1. That’s a myth. Don’t expect to steal a property just because a bank is selling it. Again, by working with a REALTOR® with experience in the foreclosure market, you can determine what homes are good values and which ones aren’t. Just don’t expect too much.
Remember, too, that foreclosures often require far higher down payments than do typical residential purchases. Often, buyers are required to put down 50 percent or more of the sales price of a foreclosed home. The competition in this market is fierce, too. You may have to compete with several other offers, which means you may end up paying more than asking price for a short sale or foreclosure. Also expect extremely long delays when you’re waiting for a response from a bank on either a short sale or foreclosure. Committees usually approve or reject offers on such properties, and committees, unfortunately, rarely act quickly.
The foreclosure market is a solid one for many investors. But it’s also one that can trip up most casual buyers. If you are interested in pursuing the foreclosure market, think long and hard first. And then, if you’re still interested, seek out a REALTOR® who’s helped others enter this often lucrative but equally risky market.
PLEASE CLICK HERE TO VIEW PROPERTIES NOT YET ON THE MARKET.
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Boosting Your Credit Score is Key
December 11th, 2008 categories: Chicago Real Estate News, For Buyers, For Homeowners, Housing Market
Today’s mortgage lenders are a lot more cautious about whom they pass out mortgage loans to. During the heyday of the housing boom, even borrowers with suspect credit – not to mention high levels of debt and shaky job histories – were able to obtain mortgage loans with low interest rates.
Thanks to the credit crisis currently gripping our nation, this is no longer the case. Today, borrowers better have solid credit if they hope to qualify for any mortgage loan at all.
What if your credit isn’t the best? Don’t panic. You can rebuild your credit score. It will take time, and you may have to put off your purchase, but it can be done. Mortgage bankers and brokers can help, too, and often do work with potential borrowers to improve their credit scores as part of their service.
First, order copies of your credit reports from the three credit bureaus, Experian, Equifax, and TransUnion, something you can do for free by visiting AnnualCreditReport.com, a Web site that is owned jointly by the three bureaus. The credit bureaus occasionally make mistakes. If you find a mistake on your report, you need to correct it. Doing so might boost your credit score. Unfortunately, this takes a fair amount of time, so be sure to check your credit reports well before you’re ready to start applying for a mortgage loan.
Secondly, if your credit score is low, that’s a sure sign that it’s time to eliminate your credit-card balances. According to the Federal Reserve, the average amount of credit-card debt in this country now stands at $8,700 a household. You can’t have this much debt on your cards, though, if you want a good credit score. The credit bureaus consider revolving credit-card debt to be bad debt. If you pay off your balance every month, of course, there is no negative impact on your credit.
Remember, too, that the credit bureaus keep a close eye on your ratio of credit used to credit available. For instance, if you have a $10 balance on a credit card with a limit of $100, your ratio of credit used to credit available stands at 10 percent. That’s worse, actually, than having a balance of $10,000 on a card with a limit of $200,000. In this later example, the ratio of credit used to credit available stands at a healthier 5 percent.
Next, pay all your bills on time. Even if you’ve not done this in the past, start doing it now. Late payments are the number-one reason why people have bad credit scores. If you consistently pay your bills on time, your credit score will rise.
The unfortunate truth is that all three of these steps take time. You can’t turn a bad credit score into a good one in a day, no matter how many spam e-mail messages promise that you can. This means you may have to wait a year or more to buy a home. Don’t view this as a negative. Look at it instead as a chance to rebuild your credit score and improve your financial health at the same time. If you do both, you’ll truly be ready to become a homeowner.
PLEASE CLICK HERE TO VIEW PROPERTIES NOT YET ON THE MARKET.
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A House is a Place to Live, Not Just an Investment
December 9th, 2008 categories: Chicago Real Estate News, For Buyers, For Homeowners, For Sellers, Housing Market
There’s a big difference between buying into the stock market and purchasing residential real estate: Not only is a house a good long-term investment, it’s a place to live. This is something that many people seem to have forgotten as they worry about whether or not they will “lose money” by purchasing a home today.
If you buy a home today in Chicago – even in some of the city’s top neighborhoods – you’ll be paying a price for your home that’s near 2005 levels. That’s a great bargain. And as long as you don’t expect to sell your home immediately, the odds are high that you’ll make a solid return when you do sell.
Back before the real estate boom, people viewed their homes as more than just a way to make quick money. The run-up in housing prices that we saw in 2001 through 2006 changed that. But there are signs that people are again realizing that buying a home isn’t like purchasing stocks.
The latest evidence of this came from the National Association of REALTORS®, which reported that most buyers now plan to live in their homes more than enough years to ensure that their property will appreciate. According to the National Association of REALTORS®’ 2008 Profile of Home Buyers and Sellers, today’s homebuyers say they plan on staying in their homes for at least 10 years. That’s the proper approach to take when looking for a new residence. Homes are places to live, not piggy banks designed for a quick cash infusion.
While homes are appreciating, they’re also providing their buyers a place to live. Remember, your home is the place where you watch your children grow, where you celebrate holidays and anniversaries, where you escape from the stresses of long workweeks.
My advice is simple: If you’re not planning to sell your home any time soon, don’t worry about what it’s worth right now. Enjoy your house as a home. Yes, it is an investment, a big one. But it’s also the place where you live your life. Don’t forget that.
And if you’re thinking about buying, don’t hesitate. Buyers today can get more home in Chicago for their dollars. The time is right for buyers in the city. Don’t miss this opportunity.
PLEASE CLICK HERE TO VIEW PROPERTIES NOT YET ON THE MARKET.
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Your Home or Your Health: Can There be a Tougher Choice?
December 3rd, 2008 categories: For Buyers, For Homeowners, For Sellers, Housing Market, Real Estate News
It’s easy for all of us to get wrapped up in our own problems. With today’s struggling economy and slumping housing market, it seems that there is little to be cheerful about this holiday season. But then you read the papers and you understand that it could be far worse. For instance, I found this story last week in the Wall Street Journal: A growing number of U.S. homeowners are facing the impossible choice of either paying their medical bills or making their mortgage payments.
How would you like to face that decision?
According to the story, many homeowners have long relied on borrowing against their homes to pay their medical bills when they suffer a serious accident or a prolonged illness. Today, though, home values are dropping. At the same time, many homeowners took out adjustable-rate mortgages that either have or are on the verge of resetting, meaning that their mortgage payments will be even more difficult to make.
The country’s high unemployment rate is making this situation worse. The Journal story mentions that more than 1.2 million jobs have been eliminated this year as of late November. When people lose their jobs, or are laid off, they often lose their health insurance coverage, and have to pay for their own coverage.
These factors have combined to force many homeowners to decide between taking care of themselves or paying their mortgage lenders. Many homeowners have already fallen behind on their mortgage loans. The Mortgage Bankers Association reports that more than 9 percent of mortgages on single-family homes were a month or more overdue, or had fallen into foreclosure in the second quarter of this year. That’s the highest that figure has been since the bankers association starting measuring it nearly four decades ago.
If you’re facing the terrible choice between paying your lender or your medical bills, my advice is to immediately call your mortgage company. It may be a hard call to make, but lenders are often able to work out compromises involving anything from temporarily suspending mortgage payments to refinancing a loan so that the monthly payments are lower.
Make sure to seek help quickly. The longer you wait, the more difficult your financial problems will become.
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Lincoln Square: A Vibrant and Growing Community
November 24th, 2008 categories: Chicago Info/News, Chicago Neighborhoods, For Buyers, For Homeowners, Housing Market
Last week, the Illinois Association of REALTORS® released the bad news that the median sales price of homes in Chicago dropped 4.5 percent in the third quarter of this year. You can read the news here.
But there are still bright spots in the city of Chicago. One of those remains the city’s Lincoln Square neighborhood. Home prices here are not only holding steady, they’re on the rise. The neighborhood’s median housing sales price of $352,500 is up 20.31 percent from one year ago.
This isn’t surprising to me. Lincoln Square is one of my favorite North Side neighborhoods. It’s a vibrant, diverse community, with evens and festivals taking place year-round.
Don’t believe me? Well this holiday season, you might want to visit Lincoln Square’s Christkindl Market, running Dec. 5, 6 and 7 in the busy neighborhood. You can visit the event’s Web page here to learn more about it. Basically, it’s a chance to enjoy bratwurst, potato pancakes, goulash and apple strudel under an oversized tent. There’ll be roasted chestnuts, ice sculptures and traveling musicians.
Of course, the neighborhood’s many shops – ranging from big chains to small, independents – will be open, and offering their wares to visitors.
The market is just one example of what makes this neighborhood a special one. And it’s only one example of why so many people are still buying in Lincoln Square. It’s one of the city’s most dynamic neighborhoods, real estate slump or not.
Buyers can find several of these neighborhoods – Lincoln Park, the Gold Coast, River North, Streeterville, to name a few – where housing prices are remaining stable or even trending upward. So while the overall sales numbers in Chicago are depressing now, residential real estate is still a good buy in many city communities.
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